Channel: Trade

Thursday, 1 December 2010
Indo-US Advance Technology Trade: Future lies here
To quench its thirst of becoming a global leader in technology trade, India needs to expand its access to high technology, and modernize and upgrade its manufacturing processes.
Tables & Graphs
 

India’s quest for a global leadership cannot be completed without access to advance technology. With India and US entering into a strategic partnership the co-operation in the sector is a win-win situation for both the countries. With US willing to remove all obstacles including rolling out sanctions on export to high technology products to India, the stage seems all set for an impressive growth in the advance technology bilateral trade. Moreover, looking at the huge untapped potential and a possible comprehensive agreement the mood seems upbeat in the Indo-US business community. Needless to say that such vibrant mood was clearly visible during Obama’s visit to India.

 

Technology trade is crucial for both India and the USA. India needs to expand its access to high technology, and modernize and upgrade its manufacturing processes while the USA is seeking markets along with more competitive high-quality products. The potential for synergy in the Indo-US trade in Advanced Technology Products is immense which suggests that the private sectors of both countries need to get more deeply involved in the dialogue process. On account of this, the India USA High Technology Cooperation Group has had substantive meetings with private sector participation. The products listed by US under Advanced Technology Products are in the categories of advanced materials, aerospace, biotechnology, electronics, flexible manufacturing, information and communication, life sciences, nuclear technology, optoelectronics, and weapons.

 

The U.S. India Strategic Dialogue highlighted the progress in Indo-US partnership and identified new areas for collaboration. Two countries underlined the importance of facilitating co-operation in strategic and high technology sectors. In U.S. India Strategic Dialogue Joint Statement, Minister Krishna and Secretary Clinton confirmed the shared objective of a strong 21st century partnership in high technology. They committed to approach the issue of export controls in the spirit of the strategic partnership between the two countries.

 

In the past 12 months, the two countries have announced nuclear energy generation parks for American companies to build nuclear reactors in Gujarat and Andhra Pradesh and they have agreed on end-use monitoring language, paving the way for increased defence sales such as the ones made for maritime patrol and transport aircraft. Several trade missions have been hosted by USA resulting in potential deals worth millions of dollars including a possible deal by a small Maryland based company to sell its automatic weather observing system to small airports and airstrips in India. There has been a reduction in duty rates on medical equipment, on machinery and instruments used for solar energy, and on earthmoving equipment used for infrastructure projects.The recent Indo-US defence deal is just opening the flood gate and many more deals are likely to fall in place boosting the bilateral high technology trade. Expected changes in the export controls regime will increase sales in high technology. Indo-US Partnership to Advance Clean Energy will accelerate the large scale deployment of clean energy in India, stimulating low-carbon economic growth in India and green job creation in the US.

 

Aircraft, spacecraft and parts is an Advanced Technology Product and constitute one of the major product categories of India’s import from the USA. In 2007 India-US bilateral trade figure soared because of the trade of Advanced Technology products (ATP). In this year the USA exported $8.1 billion and imported $709 million of ATP products from India. The main ATP export item from the USA to India was $5.8 billion worth of civilian aircrafts. Also, with the increasing military and space science collaboration between the two countries, the trade volume in this product category is expected to experience high growth.

 

The USA has always been the dominating trade partner of India in this product category with 99% share of the total trade volume in 2009. Two consecutive years 2006 and 2007 saw a huge spurt in US export to India and consequent bilateral trade growth between the two nations. Owing to deep impact of economic recession the US export to India in 2008 fell by 50%, but it again bounced back in 2009 with 21% growth in US export indicating growing trade in this product category.

 

So while bilateral trade has taken its own course, it is far behind the expected level. We must say that Advance technology trade has remained an ignored area and repercussions are quite visible with trade volume remaining lower than other US trade partners. But demand and supply equation clearly favour an unprecedented growth in the future and there is no reason why the two countries cannot follow the simple rule of economics to raise the level of trade.

 

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